Keystone XL Permit Cancelation Underpins the Importance of Innovation in Canada's Oil Patch
On January 20, 2021, just hours after his inauguration, United States President Joe Biden signed an executive order to tackle the climate crisis, which included the cancellation of the Keystone XL pipeline expansion permit. President Biden ran his 2020 election campaign with a green climate transition and decarbonization platform.
For more than a decade, the Keystone XL pipeline has been stalled and blocked by United States regulators and environmental protection groups. The project’s proponent, Calgary-based TC Energy, currently operates the existing 3,460 km Keystone pipeline, which delivers up to 590,000 bpd of Canadian crude to United States oil refineries. The Keystone XL pipeline expansion aimed to add an additional 830,000 bpd of oil export capacity from Alberta to Nebraska.
On March 31, 2020, the Alberta government announced a C$1.5 billion equity stake in the Keystone XL project alongside C$6 billion in loan guarantees. Construction had commenced on the Canadian portion of the pipeline project in 2020. Following news of the executive order, TC Energy confirmed plans to cut over 1,000 construction jobs and halt work on the project.
Reshape the Status Quo
The cancellation of a major pipeline project such as Keystone XL is a serious economic concern for Albertan and Canadian energy stakeholders. In addition to the immediate loss of construction jobs and the billions of dollars in public funds already invested in the project that may be written down, physical transportation constraints place an upper limit on the volume of salable oil to the market, and hence, limits the ability to grow future crude production from Canada.
This concern, however, is based on the perpetuation of an inefficient status quo and the belief that additional production volumes require additional pipeline capacities to reach the market.
“Prioritize the debottlenecking of existing pipeline infrastructure.”
Well Resources advocates for a common-sense approach for tackling the pipeline capacity constraint issue: prioritize the debottlenecking of existing pipeline infrastructure. In doing so, a compelling case is made to suggest that existing pipeline capacity is sufficient for handling current and future production growth.
A Path Forward
According to the Alberta Energy Regulator’s ST3: Alberta Energy Resource Industries Monthly Statistics, oil sands production accounted for 85% of Alberta’s total crude oil production in 2020. Of that, approximately 61% took the form of raw bitumen, while the remainder was either upgraded into synthetic crude oil or refined into consumer-grade products for local consumption.
Raw bitumen is a dense and highly viscous material that consists of 85% fungible oil and 15% asphaltenes. Asphaltenes are highly carbon-intensive petroleum constituents that frequently cause refinery processing issues and are uneconomic to transform into consumer fuels.
Asphaltene granules extracted from bitumen using Well Resources' SELEX-Asp process
Raw bitumen must be mixed with a diluting agent to meet minimum specifications for pipeline transportation. Each barrel of diluted bitumen mixture consists of approximately 0.3 bbls of diluent and 0.7 bbls of raw bitumen, meaning in 2020, the nearly 1,500,000 bpd of raw bitumen exported from Alberta was transported alongside 600,000 bpd of diluent.
Upfront removal of asphaltenes significantly reduces diluent dependency and allows for additional volumes of clean oil to be transported in existing pipeline infrastructure.
The upfront removal of the asphaltene portion from bitumen vastly improves the flow properties of the remaining oil and requires significantly less diluent for pipeline transport. Further, recent innovations in materials science have led to significant discoveries that allow for the utilization of petroleum asphaltenes for non-combustion value-added products, which significantly lowers the lifecycle carbon intensity of oilsands bitumen.
Case Study: Increase the effective carrying capacity in existing pipeline infrastructure by removing asphaltenes
Innovation in the Canadian Oil Patch
Well Resources has developed the Selective Extraction of Asphaltenes (SELEX-Asp) process that drastically reduces diluent requirements when transporting bitumen by pipeline while simultaneously lowering the carbon intensity of oil.
Inspired by the decaffeination process, SELEX-Asp is a patented, cost-effective, and commercially proven process that cleanly removes asphaltenes from petroleum resid. Asphaltene-free oil contains fewer contaminants than untreated oil, and can be processed in low-complexity refineries worldwide.
20,000 bpd SELEX-Asp unit commissioned in 2015
PetroChina commissioned the first 500 bpd SELEX-Asp unit at its Panjin refinery in 2009. Since then, four additional SELEX-Asp units have been commissioned for a combined processing capacity of 36,500 bpd, with the largest commissioned unit having a capacity of 20,000 bpd.
SELEX-Asp will play a vital role in bridging the economy of today to the green economy of tomorrow while the petroleum industry works towards achieving net-zero emissions. By leveraging cutting-edge innovations developed locally, Canadian energy stakeholders can continue setting the gold standard for safe, responsible, and clean resource development on the world stage.
About Well Resources
Well Resources is an Alberta-based technology company with local offices in Calgary and Edmonton. Its areas of focus are in the energy and life sciences sectors, where Well Resources develops and licenses green technologies that promote effective resource utilization.